Discussion Post-Professional Sports

Do Professional Sports Unions Fit the Standard Model of Traditional Unionism?

James Richard Hill & Jason E. Taylor

Published online: 29 June 2007

# Springer Science + Business Media, LLC 2007

Abstract Current literature generally highlights the unique differences between sports and traditional unions. In particular, the contrast between the two types of unions’ approaches to the free market when it comes to wage determination— sports unions fought the “reserve clause” to obtain free market outcomes while traditional unions fought to circumvent the market for wages—has been widely cited. The purpose of this paper is to highlight the hitherto neglected comparisons between sports and traditional unions. With respect to both economic and non- economic issues, professional sports unions share far more in common with their traditional counterparts than the labor and sports economics literatures would lead one to believe.

Keywords Professionalsportsunions.Traditionalunionism. Union–management relations

Introduction

Although the sports industry is small in comparison with other U.S. industries, it garners a vastly disproportionate quantity of the nation’s media coverage: the plights of professional athletes are generally of greater interest to the typical American than those of Stan the steelworker. To illustrate, the cancellation of the 2004–2005 National Hockey League (NHL) season brought a far greater barrage of negative opinions concerning union–management relations than media coverage of the Northwest Airlines mechanics strike of 2005.

J. R. Hill (*) : J. E. Taylor

Central Michigan University, Mt. Pleasant, MI 48859, USA e-mail: [email protected]

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In addition to differences in the public’s interest, the fundamental objectives of sports and traditional unions might appear clearly different. In fact Leeds and von Allmen (2005: 314) state, “Unions in professional sports do not readily fit” into the broad categories of union behavior as sports unions advocate “the free market while the otherwise free-market owners [advocate a] salary scale.” That sports unions were largely created to battle the “reserve clause,” which gave owners monopsony power to exploit players by paying wages below their marginal products, is the backbone of most analyses contrasting sports and traditional union behavior.1 Now that players unions in all four major sports largely have won the battle for market-based wage determination (i.e., free agency), franchise owners have focused their attempts on ways to re-circumvent the market. With respect to the recent NHL negotiations, for example, the players’ union argued to preserve market wage determination for free agents while owners sought, and won, ceilings on player salaries overall.

Of course this behavior contrasts heavily with that of traditional unions and firm owners whereby the union generally attempts to circumvent the market by raising wages above their equilibrium level and the owners prefer a more laissez-faire approach. Are we therefore left to conclude that traditional unions and sports unions are completely different animals that should be treated by labor economists in entirely separate ways? Or conversely, is the umbrella provided by the economic theory of union activity large enough to encompass an analysis of sports unions? Despite the recent interest in sports economics and sports unions, no work has yet been devoted to a thorough comparison and contrast of the issues important to traditional and sports unions.2

While the bilateral monopoly aspects surrounding professional sports unions, as well as the vast differences in athletes’ abilities, clearly provide a fundamentally unique economic context for wage bargaining, the primary objective of any union— sports or otherwise—is the same: the monopoly seller of labor wants to extract as large a share as possible of the firms’ economic rents to return to the workers. Furthermore, we show that with respect to most collective bargaining issues—rent- sharing, seniority, grievance procedures, drug-testing, and inter-generational issues involving current and future members—sports unions and traditional unions surprisingly fit quite easily under the same umbrella of economic analysis. Although important differences between sports and traditional unions exist, we conclude that general theory of collective bargaining is widely applicable to sports unions, and the plight of sports unions may provide lessons about union behavior at large.

Antirust Exemption and Rent-Sharing

Following the passage of the Clayton Act of 1914 labor unions—sports and otherwise—have enjoyed exemption from antitrust laws. While the Supreme Court

1 Fort (2003: 259) states that “unions have never supported completely unrestricted free agency. All restricted versions of free agency restrict supply and raise the prices of experienced players relative to complete free agency.”

2 The most complete discussions of professional sports unions are by Dworkin (1987); Quirk and Fort (1997), and Staudohar (1996). None of these authors offers the type of comparison and contrast that articles and textbooks have provided for traditional versus public sector unions.

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has refined this exemption through various decisions over time, unions are generally free to pursue negotiations, which reduce competition between employers as long so they do so unilaterally in the context of collective bargaining negotiations. In this regard, traditional unions have fought to obtain limits on subcontracting, work preservation clauses, restrictive work rules, and jurisdictional claims for their members. Perhaps the primary objective of unions, however, is to employ the market power gained by antitrust exemption to expropriate some of the rent earned by firms, particularly those in sheltered markets, and redistribute it to the workers. In fact, a stated goal of large industrial unions such as the United Automobile Workers (UAW) is to unionize their entire industry so as to “take wages out of competition.”3 It is true that with respect to sports unions the goal is largely the opposite—to prevent owners from “taking wages out of competition” as they were under the reserve clause system. Still the ultimate goal of players associations is identical to that of their non-sports union counterparts; to extract the rents earned by franchise owners. Only the means have changed.

Professional athletes fought most of their early labor battles to extract franchise rents through a tripartite approach involving unions, court battles, and the formation of new leagues.4 Of course their most important objective was to eliminate the monopsonistic reserve clause and facilitate the higher pay that goes with a competitive environment for a highly skilled worker’s services. As the histories of the various battles against the reserve clause are presented in many sources, we will summarize by noting only that players unions were instrumental in bringing free agency to all four major sports between 1976 and 1996.5 Subsequent to the advent of free agency, professional athletes have seen their salaries, and consequently their share of franchise rents, increase considerably.

Traditional unions have not been able improve the economic well-being of their members in such a dramatic or sweeping fashion. When confronted with monopsony

3 Note that unlike most traditional unions, sports unions do not generally directly engage in negotiations over a specific member’s wage, although sports unions have work to set parameters on wage-related issues, and in some instances, such as the National Basketball Association, actually have negotiated specific wage levels for future members based on the sequence in which they are drafted.

4 A notable example of an early attempt to unionize baseball players was the formation of the Brotherhood of Professional Baseball Players by John Montgomery Ward in 1885. Failing to gain significant changes to the reserve system, the players started a new league, the Players League, in 1890, which lasted for one season (Staudohar 1996: 15).

5 Free agency was voted into the CBA of Major League Baseball in 1976 following an arbitration ruling that Dave McNally and Andy Messersmith were free agents since they were allowed to play an entire season with an unsigned contract (Leeds and von Allmen 2005: 330–33). Free agency provisions were incorporated into the 1976 NBA CBA as a result of Robertson v. National Basketball Association, 1975: draft pick compensation for teams losing a free agent remained until 1980–1981 season (Staudohar 1996: 112–16). Several court battles were fought over NFL free agency. After the Radovich decision in 1957 the NFL allowed free agency but under the Rozelle Rule the commissioner (Pete Rozelle) set compensation awards from teams gaining a free agent to those losing the free agent and hence ittle player mobility existed. In 1976 the players won the Mackey v. NFL case but bargained away true free agency by allowing another restrictive compensation system to be added to the CBA. True free agency arrived for NFL players with the 1993 CBA following a major court victory in McNeil v. Pro Football in 1992 (Staudohar 1996: 79–84). Hockey began limited free agency in 1975 following competition for players from a rival league, the WHA. However the “equalization plan” provided compensation for free agents. As with football’s Rozelle Plan player mobility was sparse. Following a victory in McCourt v. California Sports in 1979 the 1982 NHL CBA had provisions for true free agency (Staudohar 1996: 154–58).

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power suppressing wages below competitive levels or monopoly power creating rents which the union workers wish to share, traditional unions have used their bargaining power, created by the antitrust exemption, to extract rents through higher wages. The wage premium enjoyed by traditional union members over nonunion workers was estimated to have climbed as high as 38% in the early 1930s (Johnson 1975: 24). Of course all workers—union or not—have made broad economy-wide gains since this time through the legal system with the passage of the Fair Labor Standards Act of 1938, which provides minimum wages and overtime pay provisions, the Social Security Act of 1935, which provides disability, unemploy- ment insurance, and retirement income to all working Americans, and the Occupational Health and Safety Act (OSHA) of 1970, which creates federal standards for working conditions. Bennett and Taylor (2001) show that organized labor was instrumental in bringing about each of these important institutional reforms. Furthermore, they argue that these reforms are likely to account for at least some of the steady decline in private sector unionization—from over a quarter of workers around 1950 to only around one in eight today—as these institutions may circumvent the need for collective bargaining. Along with the decline in union membership, the union wage premium has likewise fallen since the 1930s. Today, although the union wage effect varies greatly by industrial concentration and stages of the business cycle, Blanchflower and Bryson (2004) put the union wage premium at around 18%.

Another likely factor at play in the sharp decline in union wage differentials and membership is the increase in global competition over the past several decades. As this competitive increase has reduced rents earned by U.S. firms, unions have seen their ability to increase workers wages dissipate. Of course sports franchises do not generally suffer the same threat to their favorable positions from globalization that other American firms do. If anything globalization and the lower cost of communication have expanded interest in the athletic leagues’ products and widened their market and profit margins.6

Despite the continuing monopoly position of sports teams and leagues, the NHL owners during the recent year-long lockout, in a pattern followed in many of the other major sports, claimed that all but a few teams were losing money due to exorbitant player salaries. These claims of losses by franchise owners in all sports are generally the result of player salaries rising faster than revenues rather than declining revenues due to competition as in other American industries. As free agents garnered wages that either approached or, in some cases exceeded, their economic contribution to the team through competitive bidding for their services, owners blamed free agency for sports franchises’ allegedly woeful economic positions. Many franchises continue to lose money on their income statements— although the counterargument is that franchise sales values have risen enough each year to offset these losses—and small market teams, in particular, have struggled to remain competitive after the advent of free agency (Quirk and Fort 1999).

6 Note that the National Football League (NFL) has responded to globalization with the creation of a new league, NFL Europe, both to generate television revenue and interest in the United States and, more importantly, to reach out to this emerging market for American football overseas.

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In hopes of stemming the tide of rising player salaries, franchise owners have sought mechanisms to slow or control market-driven wage growth. Hill and Groothuis (2001) outline changes to the 1999 National Basketball Association (NBA) collective bargaining agreement (CBA) designed to do just this. They highlight a maximum limit for individual player salaries which is based on a percentage of team payroll and years of experience in the league. With respect to professional hockey, under the terms of the most recent NHL CBA no player is allowed to earn more than 20% of the team’s allowable payroll. Additionally, professional football, basketball, and hockey now have “salary cap” agreements that allocate a certain proportion of the sport’s revenue to player salaries. To illustrate, in the NBA the latest CBA calls for player salaries to equal 57% of revenues (Inside Hoops 2005); in the new NHL CBA players will be guaranteed between 54% and 57% of revenues depending on revenue levels (NHL CBA details).7 Based on this percentage each team’s salary cap is established.8 Major League baseball, while not allocating a percentage of revenues to salaries, has a “competitive balance tax” to slow salary growth. The tax rate increases from 22.5% to 40% for habitual offenders whose team payroll exceeds the tax threshold (MLB Basic Agreement 2002: 78–81).

Negotiations such as these are the most transparent illustration of bargaining over the distribution of economic rents.9 Traditionally, blue-collar unions bargained for hourly wage increases and, in more recent decades, cost-of-living adjustments. Given the uncertainty of company profits over the length of 3-year agreements, the size of union workers’ share of rent, if any, was impossible to determine until after the fact. However, as a result of concessionary bargaining in 1982 UAW workers now have profit-sharing plans under which they receive a cost-of-living adjustment increase per year and end-of-year bonus checks based on the firm’s profits. For example, UAW workers at DaimlerChrysler received profit-sharing checks for $460 in 2003 and $8,100 in 2000; UAW workers at Ford received $160 in 2003 and $8,000 in 2000; GM workers received $940 in 2003 and $1,775 in 2000 (Holley et

7 Both hockey and basketball have an escrow system added to their CBA cap systems. In the event that player salaries might exceed the designated percentage of league revenues, a portion of player salaries is set aside in an escrow account. After a full accounting of revenue is determined, the money is either returned to the player if league profits are high enough or given back to the league if they are not. The NBA has this system because of their “soft cap.” In fact during the 2004–2005 season, 27 out of 30 teams exceeded the cap. The NHL has added this system to their new CBA presumably because of the uncertainty of projected future revenue after the cancellation of the 2004–2005 season.

8 In football the NFL commissioner is empowered to cut players from a team’s roster if they are over the cap; analysts often refer to this as a “hard cap” (NFL Collective Bargaining Agreement 2002–2008). The new NHL CBA also calls for a “hard cap” with no teams allowed to exceed the limit except in the case of injury (NHL CBA 2005 details). The NBA has a “soft cap” (i.e., there are numerous exceptions allowed for a team to exceed the team salary limit) but a team must pay a 100% luxury tax for exceeding the “team tax trigger” which is set at 61% of revenues (Inside Hoops and NBA CBA, 1999).

9 Allen Sanderson states “The owners have a monopoly over franchises. The union has a monopoly over the labor market. This is an intra-family squabble over who gets the monopoly profits. The players share in these monopoly profits. They make substantially more money than they would in a competitive market” (quoted in Fort 2003: 259).

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al. 2005: 311). The underlying theme of these new pay schemes is to intertwine the economic well-being of the firm and individual; but viewed in a different light, these profit-sharing plans represent a more explicit approach to sharing economic rents with union workers.

Textbooks (as well as the media) dealing with these issues in professional sports have generally focused on the exorbitant salaries free agency has brought to athletes. However, athletes’ success in attaining higher wages has largely obscured the parallels between sports and traditional unions. Specifically both types of unions have succeeded in their fundamental goal—rent redistribution from owners to workers. In this respect, it is clear that sports unions are no different than their traditional counterparts.

Wage Inequality, Wage Compression, and the Median Voter in Traditional and Sports Unions

From the perspective of traditional unions, Faber and Saks (1980) show that wage inequality within firms is positively related to the number of workers voting for unionization in NLRB representational elections. Since wage inequality is a driving force behind unionization, Freeman and Medoff’s (1984: 79–85) finding that unions generally reduce wage inequality both within and across unionized firms is not surprising. Although many union contracts reward workers for both positive skill differentials and seniority through a negotiated wage schedule, the union’s median voter typically desires tighter wage compression.

In contrast to traditional unions, the victories of professional sports unions in their respective battles for free agency have led to vast growth in wage inequality in professional athletics.10 To illustrate, in the NBA, two players accounted for almost 70% of the Miami Heat’s payroll in the 2004–2005 season. In the 2005 Major League Baseball (MLB) season, two players accounted for almost 47% of the total Houston Astros’ payroll.11 Still, despite the growth in wage inequality, the advent of free agency has been a boon to all professional athletes, not just the superstars—an outcome that, as discussed below, is largely attributable to sports unions having to appeal to the median voter amongst their membership, just as traditional unions must.

Median voter and economic bargaining Because union leaders must negotiate an agreement that can be ratified by a majority of the membership, the union’s role as a monopoly seller of labor sometimes conflicts with its duty to the “median voter”

10 The Screen Actors Guild (SAG) shares some of the same issues with sports unions in regard to compensation. SAG negotiates pay scale rates for union members but stars who are also union members are free to negotiate individual contracts that greatly exceed standard rates. This leads to vast differences in compensation between actors within the same union. The Guild also negotiates contracts governing “residuals” for actors; this is similar to the “economic-rent” bargaining that sports unions engage in with management over the portion of total revenue that will devoted to player salaries.

11 For complete information on player salaries from all four major sports, see the USA Today Salaries Database: http://www.usatoday.com/sports/salaries/index.htm.

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when firms seek concessions. Appeals to the “median voter” require finesse by union and management bargainers. Craypo (1986: 61–62) reported that the West Coast longshoring union negotiated a new agreement to abolish restrictive work rules and allow the introduction of labor-saving equipment. The reported $29 million extracted by the union for early retirees and displaced workers was far outweighed by the estimated $100 million in cost savings. However, introduction of new technology does not always result in compromise. Craypo (1986: 56) also reported that the introduction of “boxed beef,” which is packaged at the slaughterhouse, cost approximately 5,000 unionized meat cutters their jobs, the highest paying jobs in the industry, in retail and cutting centers.

This conflict with the “median voter” may be even stronger in the negotiations of professional sports unions because reaching a consensus on economic issues is more difficult when there is a wider disparity in pay between members. Indeed, the conflict between union rank-and-file and superstars in the NBA played a large role in the dynamics of the 1998–1999 NBA lockout. Hill and Groothuis (2001) show the conflict was fraught with just as much intra-union discord as it was with union– management disagreement. Free agency raises the salaries of above average players substantially but may have far less effect on the journeyman athlete’s pay. To appease their concerns the unions for baseball, basketball, football, and hockey all negotiate minimum salaries for players. These minimums have not kept pace with average salaries but presumably represent an increase over offerings in an unfettered market for the marginal athlete. For example, in Major League Baseball the minimum salary has risen from $19,000 in 1976 to $300,000 in 2004 while the average salary rose from $54,330 in 1976 to $2,486,609 in 2004. This pattern is repeated in the NFL, NBA, and NHL. For example, the new NHL CBA calls for a minimum salary of $450,000 for the next two seasons http://www.nhl.com 2005).

Of course, players at the lower end of the earning spectrum do not represent the only “median voter” dilemma for sports union negotiators. Although top stars earn the most in the leagues, they also pose the biggest threat to the unions’ future if these stars are dissatisfied with union representation. In the past, competing leagues such as the short-lived United States Football League (1983–1985) were started using dissatisfied stars from existing leagues or rookie sensations from college. This threat is always present.

Non-Wage Collective Bargaining Issues

While we thus far have highlighted both some similarities and disparities between the objectives of sports and traditional unions with respect to the issues of pay, in this section we analyze non-wage collective bargaining issues. We find that with respect to almost all of these non-financial issues, the objectives of the two types of unions are also very closely aligned.

Collective voice and grievance procedures A union, whether of professional athletes or traditional workers, is designed to embody the membership’s “collective voice.” Hirschman (1971) discusses this “voice” as a second market adjustment mechanism in

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contrast to exit-and-entry. In theory collective voice should reduce turnover as disgruntled employees can vent their frustration through their union. Freeman and Medoff (1984: 98–101) confirm that unionism increases job tenure and reduces quit rates.

Quintessential to the union’s role as the workers’ “collective voice” is the grievance process. The vast majority of traditional union CBAs have a multi-step grievance procedure which ends with arbitration. Workers file grievances over various issues involving interpretation of the CBA, but most cases involve discipline. The grievance or arbitration procedures act to mitigate arbitrary, capricious, or discriminatory discipline meted out by managers. At a firm, this process reduces turnover and quit rates and improves employee morale.

Similar to their traditional counterparts, the CBAs of professional baseball, basketball, football, and hockey all have specific grievance procedures. A few grievances have arisen over interpretation of CBA language, but most involve the discipline imposed by the Commissioner of the League. In the NHL, NFL, NBA, and MLB the league commissioner has the authority to impose punishments in certain circumstances. Grievances over the harshness of the penalty have been filed in several cases, and arbitrators have occasionally overruled the commissioner. In addition, football and basketball have set up processes for handling injury grievances. If an injury sustained in league play or approved conditioning decreases a player’s performance and the player is dismissed from the team, the player is due added monetary compensation. Injury grievance procedures are designed to protect player interests in these circumstances.

Seniority In traditional unions seniority plays a fundamental role over many workplace decisions. The standard illustration of seniority is the union credo: “last hired, first fired.” Holley et al. (2005) report that 94% of union contracts have seniority provisions concerning layoffs; in about half of these CBAs management considers seniority first in the decision-making process. Seniority also plays a role in promotion; Katz and Kochan (2000: 246) report: “Seniority decisions are mentioned as a factor to be used in promotion decisions in 73% of the manufacturing and 57% of the non-manufacturing agreements in the 1995 contract data base compiled by the Bureau of National Affairs.” Of course most CBAs include a seniority-based pay schedule under which workers receive higher wages for longer job tenure regardless of improved productivity (Holley et al. 2005: 365–67).

Although in professional sports pay is generally performance-based, unionization has meant that seniority now also plays an important role in athletes’ labor contracts— certainly much more than it would have in the unfettered market. For instance, in the NBA and NFL the CBA-mandated minimum salary rises with years of service. While a second round draft pick in the NBA earned the rookie minimum of $366,931 for the 2004–2005 season, a 10-year veteran was guaranteed a minimum salary of $1,070,000. When the NFL and its Player’s Association agreed to extend their existing CBA until 2008, they amended the minimum salary structure to be similar to that of the NBA; for the 2004 season a rookie player receives a salary of $230,000 whereas a 10-year veteran earns $760,000. To provide incentives for teams in the NBA to retain veterans, any amount paid to a player in a 1-year minimum contract that exceeds the minimum salary applicable for a player with 2 years of service is paid out

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of a league-wide benefit fund and does not apply to the team’s salary cap.12 A similar plan has been adopted by the NFL.

In addition to affecting provisions for minimum pay, seniority also plays a role in the aforementioned maximum individual salary limits in the NBA. For the 2005– 2006 season the maximum salary was 25% of the salary cap or $12 million for players with 0–6 years of service, 30% of the salary cap or $14.4 million for players with 7–9 years of service, and 35% or $16.8 million for players with 10 or more years of service (Inside Hoops 2005).

Still, for professional athletes the biggest benefit obtained from seniority is the attainment of free agency. According to the 2002 Major League Baseball CBA, players obtain free agency once they complete 6 years of service.13 In the NBA, first-round draft picks can become free agents following the completion of their rookie scale contracts. This contract is guaranteed for three seasons but may run four seasons if the drafting club exercises its fourth-year option; players for whom a club does not pick up the fourth-year option generally do not fare well in the free agent market and earn only the league minimum salary if they stay in the league.14 In the NFL players with 5 years of service can become free agents. Players with less than 5 years but more than 3 years of service can become restricted free agents. As in the NHL, teams, which lose restricted free agents, can receive compensation in the form of draft picks (NFL Collective Bargaining Agreement 2002–2008).

Free agency in the NHL is based on a combination of the player’s age and years of service. For the 2005–2006 season the new NHL CBA calls for unrestricted free agency for players age 31 or older with four accrued seasons. In the next season the age is lowered to 29 with 4 accrued seasons or for anyone regardless of age with eight accrued seasons. Beginning in the 2008–2009 season, and for the remainder of the CBA, the age will be 27 years and four accrued seasons or seven seasons regardless of age. Other NHL players may become restricted free agents based on age/service criteria. If such players do relocate to new teams the player’s old team can receive compensation in the form of draft picks (NHL CBA details and NHL/ NHLPA Collective Bargaining Agreement 1995).

Another way in which seniority affects sports unions CBAs is with respect to the ability to submit pay disputes to salary arbitration. In MLB, players with 3 years of service (highly ranked players at their position with somewhat less than 3 years are also eligible) are eligible for “final-offer” salary arbitration. The player and management submit their offers for the next year’s salary to a panel of three arbitrators; the panel must select either the player’s or management’s offer (MLB Basic Agreement 2002). In the NHL the new CBA allows players to seek salary

12 The details of the recent CBA for the NBA are at http://www.insidehoops.com/nba-collective- bargaining-agreement.shtml

13 It has been suggested by Hill (1985: 79–80) that this lengthy period before free agency is needed in baseball so that owners can recoup their training costs in players during their minor league services and first season or two in the majors when they may not see much playing time.

14 Under the latest NBA CBA, a first-round draft pick can be tied to his drafting team for 5 years if the team exercises its option of a right-of-first refusal in the fifth season. The player is free to negotiate with other teams in the league to find the best contract but the player’s drafting club can retain his services by matching this offer.

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arbitration after 4 years in the league. The decision is rendered by one arbitrator who is free to fashion a compromise between the player’s and management’s offers (NHL CBA details and NHL/NHLPA Collective Bargaining Agreement 1995). In short seniority plays a prominent role in the CBAs of sports unions, just as it does in more traditional union settings.

Two-tier pay schemes versus rookie pay Should the union care about its future members’ well-being as much, less, or more than the well-being of its current members? Viewing unionization through the lenses of political economy suggests that CBAs will be negotiated by unions with the current members benefiting at the expense of future ones. In fact, traditional union CBAs regularly contain a two-tier wage agreement under which new hires are subject to a lower pay scale than current employees. To illustrate, American Airlines introduced a lower tier of pay, half the existing rate, for new pilot hires in November 1983, and this approach has subsequently been used by many businesses to lower their average costs as they expand their operations (Katz and Kochan 2000: 45). Current employees see such an agreement as a way to avoid layoffs and wage concessions since the approach only works if the company is expanding. About 28% of union contracts sampled by the Bureau of National Affairs in 2003 had two-tier wage provisions, and manufacturing firms were slightly more likely to have such a plan (Holley et al. 2005: 316). Of course, such provisions may create discord between employees in the different tiers as well as a discontent with union leadership among new hires and, hence, increase turnover.

Variations on the two-tier wage system for current and future employees are clearly present in sports CBAs. In the NBA, the league enforces a rookie pay scale that covers a player’s first three seasons and gives the team an option for a fourth- season contract at a predetermined sliding percentage scale (lower first round picks get a higher percentage salary increase in a fourth-year option contract). In the NFL rookie draft picks are assigned a salary. Teams are free to exceed the salary for an individual rookie provided they don’t exceed the club’s rookie allocation pool based on their draft picks. The NHL has a maximum salary for rookies. The trend in recent collective bargaining negotiations in basketball and football and currently in hockey is to institute constraints to lower the compensation of rookie players who are not currently members of the league and union in order to make more funds available for veterans’ salaries.

Drug-testing Recent scandals in professional baseball over steroid use have put a large spotlight on the issue of drug-testing of professional athletes. All four major sports unions have agreements covering the testing of athletes for drug abuse and steroids. Media and congressional pressure following the BALCO (BAY Area Laboratory Co.- Operative) investigation and recent positive tests for steroid use by some top players forced the MLB Players’ Association to acquiesce to league demands for more stringent steroid testing despite an existing drug-testing policy in the ongoing CBA.

In 1983, the NBA became the first of the four major professional sports leagues to adopt a drug program that included testing and rehabilitation in their collective bargaining agreement. The initial agreements focused only on “drugs of abuse” such as cocaine and heroine. Later agreements expanded this list and added a policy on testing and penalties for steroids. With respect to professional football, the NFL and

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its Players’ Association have engaged in a series of legal battles over drug testing. In the 1980s NFL Commissioner Pete Rozelle fought to adopt random testing for drugs such as cocaine, marijuana, opiates, and amphetamines during the season rather than just in preseason. He lost to arbitration rulings on this issue. In 1990, following a Senate hearing on steroid abuse in the NFL, Commissioner Paul Tagliabue imposed random testing for steroids during the season (Staudohar 1996: 91–93). The formal drug policy and program that the NFL now has was accepted as part of the 1993 NFL–NFL Players’ Association Collective Bargaining Agreement. The steroid testing policy of the NFL had recently been stiffened in response to congressional pressure (Maske and Shapiro 2005). The NHL adopted a steroid policy in its 2005 collective bargaining agreement—prior to this the league maintained that steroids were not a problem among players. Congress believes the NHL new policy is too weak and is pressuring the NHL for a more effective testing program.

Many traditional unions also have drug-testing provisions in their CBAs. Unlike professional sports where the use of performance-enhancing drugs is a major issue at the bargaining table, in other industries the focus is on recreational drug and alcohol abuse. Holley et al. (2005) report: “In 1982, only 3% of Fortune 500 companies were involved in employee drug testing. Ten years later, a 1992 American Medical Association survey found 75% of the responding firms testing for employee drug use.” In the railroad and airline industries the Supreme Court has ruled that companies can impose drug screening without collective bargaining on the issue. With the exception of these two industries, however, drug screening is a mandatory subject of bargaining. Therefore, management and unions must negotiate over whether or not to test, the type of test to use, the frequency of testing, or random versus for-cause testing. If an impasse is reached in bargaining over this issue, management can implement a program unless other contract language prohibits such action.

Conclusion

This discussion is not meant to serve as a comprehensive treatment of the similarities and differences between traditional and sports unions. Rather, our intent is to divert the dialogue concerning sports unions away from the narrow focus that has been so dominant in the literature and texts for the past three decades. While there is a clear difference in the way that sports and traditional unions embrace the virtues of the free market for pay, the primary economic objective of both sports and traditional unions is to use their bargaining power, created by the anti-trust exemption, to redistribute rents from owners to workers. Furthermore, the glaring difference in wage dispersion between player salaries caused by free agency often overshadows the common goals pro sports union share with traditional unions in trying to appease the economic concerns of “median voters.”

Both types of unions also share many non-wage common elements. Seniority plays a major role in the collective bargaining agreements (CBAs) in both settings. Likewise, grievance procedures designed to improve workers “collective voice” are present in the CBAs in both traditional and sports unions. Furthermore, unions in pro sports and more traditional industries have sought to improve the welfare of current

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union members at the expense of future members. As the scourge of drugs has affected the workplace environment everywhere, CBAs have been used to protect workers privacy and minimize the invasiveness of testing in both traditional and athletic settings. In short, sports unions appear far more similar to traditional unions than one might think at first glance. Despite the emphasis on differences highlighted by both labor and sports economics literatures, it appears that the umbrella provided by the theory of collective bargaining is large enough to cover most of the broad issues that professional sports unions face.

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